0000732717-07-000068.txt : 20070724 0000732717-07-000068.hdr.sgml : 20070724 20070724075437 ACCESSION NUMBER: 0000732717-07-000068 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20070630 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070724 DATE AS OF CHANGE: 20070724 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AT&T INC. CENTRAL INDEX KEY: 0000732717 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 431301883 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08610 FILM NUMBER: 07994990 BUSINESS ADDRESS: STREET 1: 175 E HOUSTON STREET 2: ROOM 9-Q-06 CITY: SAN ANTONIO STATE: TX ZIP: 78205 BUSINESS PHONE: 2108214105 MAIL ADDRESS: STREET 1: 175 E HOUSTON STREET 2: ROOM 9-Q-06 CITY: SAN ANTONIO STATE: TX ZIP: 78205 FORMER COMPANY: FORMER CONFORMED NAME: SBC COMMUNICATIONS INC DATE OF NAME CHANGE: 19950501 FORMER COMPANY: FORMER CONFORMED NAME: SOUTHWESTERN BELL CORP DATE OF NAME CHANGE: 19920703 8-K 1 q2earning8k.htm AT&T EARNINGS RELEASE 2Q 2007

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of report (Date of earliest event reported) July 24, 2007

AT&T INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	1-8610	43-1301883
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

175 E. Houston, San Antonio, Texas	78205
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code (210) 821-4105

__________________________________

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Items 2.02 Results of Operations and Financial Condition.

The registrant announced on July 24, 2007, its results of operations for the second quarter of 2007. The text of the press release and accompanying financial information are attached as exhibits and incorporated herein by reference.

To assist investors, pro forma revenues reflecting current customer and segment classifications may be found at www.att.com. These classifications will continue to be adjusted to reflect current management of customer relationships.

Item 9.01 Financial Statements and Exhibits.

The following exhibits are furnished as part of this report:

(c)

Exhibits

99.1

Press release dated July 24, 2007 reporting financial results for the second quarter ended June 30, 2007.

99.2		AT&T Inc. selected financial statements and operating data.

99.3		Discussion of OIBDA.

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	AT&T INC.



Date: July 24, 2007	By: /s/ John J. Stephens John J. Stephens Senior Vice President and Controller

EX-99 2 ex99_1.htm AT&T PRESS RELEASE DATED JULY 24, 2007

For more information, contact:

McCall Butler

(703) 731-3735

mbutler@attnews.us

AT&T Posts Strong Second-Quarter Results Led

by Accelerated Wireless Growth, Solid Regional Results

and a Significant Improvement in Enterprise Trends

$0.47 reported earnings per diluted share, versus $0.46 in the year-earlier quarter

$0.70 adjusted earnings per diluted share, up from $0.58 in the second quarter of 2006

1.5 million net gain in wireless subscribers to reach 63.7 million, with further improvement in wireless churn to 1.6 percent overall and 1.2 percent for postpaid subscribers

14.9 percent growth in wireless service revenues with wireless data revenues up 66.9 percent and service ARPU (average revenues per user) up 3.6 percent

Substantial improvement in enterprise customer revenue trends driven by accelerated growth in IP-based data services

200,000 net increase in satellite and AT&T U-verse^SM video subscribers; U-verse video ramp to 51,000 subscribers at the end of June, up from 13,000 at the end of the first quarter

Note: AT&T's second-quarter earnings conference call will be broadcast live via the Internet at 10 a.m. EDT on Tuesday, July 24, 2007 at www.att.com/investor.relations.

SAN ANTONIO, July 24, 2007 – AT&T Inc. (NYSE: T) today posted its ninth consecutive quarter of double-digit growth in adjusted earnings per share as it ramped revenue growth and delivered continued strong execution in merger integration. Results were led by accelerated growth in wireless and IP (Internet Protocol)-based services along with substantial improvement in enterprise revenue trends.

AT&T is the United States’ wireless leader, with 63.7 million subscribers, and one of the world’s leading providers of business communications services, with high quality networks and a growing array of advanced services.

AT&T's second-quarter 2007 reported earnings per diluted share were $0.47 versus $0.46 in the year-earlier quarter. Adjusted earnings per share, which exclude costs and accounting effects related to major acquisitions, were $0.70, up 20.7 percent versus adjusted earnings per share of $0.58 in the year-earlier quarter.

"AT&T has a strong foundation for growth in wireless and IP-based services, and in the second quarter we improved our trajectory in key areas," said Randall Stephenson, AT&T chairman and chief executive officer. “Wireless revenue growth accelerated for the fourth consecutive quarter. Our U-verse video service has begun to ramp aggressively. And we took a major step up toward revenue growth in enterprise services, where AT&T has tremendous assets and great potential.

“Mobility is a major growth engine for AT&T,” Stephenson said. “Our launch with Apple of the breakthrough iPhone has quickly redefined customer expectations for their wireless experience, initial response was unprecedented, and sales in July continue to be strong. On June 29, we also announced an agreement to acquire Dobson Communications, which will further expand our wireless coverage in key rural and suburban areas.

“At AT&T, our goals are to lead in innovation and drive sustainable growth across all our businesses,” Stephenson said. “We have good momentum heading into the second half of the year, our assets position us well for the long term, and I am excited about the opportunities ahead.”

Ramp in Revenue Growth

In the second quarter of 2007, AT&T reported revenues of $29.5 billion, up from $15.8 billion in the year-earlier quarter, prior to AT&T’s acquisition of BellSouth Corporation and the accompanying consolidation of wireless results.

In addition to historical reported results, to provide further basis for comparison, AT&T provides pro forma results, which combine revenues from AT&T, BellSouth and Cingular Wireless consistently for all periods. On this basis, AT&T's second-quarter 2007 revenues totaled $29.8 billion, up 2.0 percent versus results for the year-earlier quarter. This increase is up from year-over-year pro forma revenue growth of 1.7 percent for the first quarter of 2007 and 1.3 percent for the quarter before that.

This ramp in revenue growth reflects AT&T’s strengthened double-digit gain in wireless revenues along with substantially improved trends in enterprise services. In addition, AT&T’s regional business revenues delivered continued solid growth, regional consumer revenues were up modestly reflecting growth in total

consumer connections, and Advertising & Publishing revenues were stable. These results more than offset anticipated declines in wholesale and national mass markets, where trends were in line with recent quarters.

Continued Strong Growth in Adjusted Earnings Per Share

AT&T’s reported net income for the second quarter totaled $2.9 billion, compared with $1.8 billion in the year-earlier quarter. Reported earnings per diluted share totaled $0.47 versus $0.46 in the second quarter of 2006.

Compared with reported results in the second quarter of 2006, AT&T’s reported operating expenses were $24.5 billion, up from $13.2 billion; reported operating income was $4.9 billion, up from $2.6 billion; and AT&T’s reported operating income margin was 16.8 percent versus 16.5 percent.

AT&T’s adjusted second-quarter earnings, which exclude costs and accounting effects associated with major acquisitions, were $4.3 billion, or $0.70 per diluted share, up from $2.3 billion, or $0.58 per diluted share, in the year-earlier quarter. Second-quarter adjusted earnings per share reflect improved revenue trends combined with solid execution to realize merger synergies, with a one cent benefit from state tax law changes and a one cent benefit from the sale of non-strategic assets.

AT&T’s adjusted operating income for the second quarter of 2007 was $7.1 billion, compared with $3.0 billion in the year-earlier quarter. AT&T’s adjusted operating income margin was 23.9 percent, up from 19.0 percent in the second quarter of 2006. AT&T expects to continue to operate at the top end of its previously provided outlook for a 2007 adjusted operating income margin range of 23 percent to 24 percent.

Costs for AT&T’s U-verse initiative, which delivers advanced television and high speed Internet services, continue to be in line with the company’s previous outlook. AT&T’s major merger integration initiatives continue on schedule, and merger synergies continue to run ahead of the company’s original outlook. Cost savings from BellSouth and AT&T Corp. merger integration in the first half of 2007 totaled $1.9 billion, approximately one-third capital and two-thirds expense. AT&T continues to expect synergies from these mergers will reach more than $3 billion for the full year 2007, growing to more than $5 billion in 2008.

Share Repurchase Plan Completed Ahead of Schedule

AT&T repurchased 98 million of its shares in the second quarter for $3.9 billion and ended the quarter with 6.1 billion shares outstanding. In March 2006, AT&T announced a plan to buy back $10 billion of its common shares by the end of 2007. AT&T reached the $10 billion target ahead of schedule, in early July. AT&T has approximately 125 million shares remaining in its current repurchase authorization and expects to continue repurchases during the second half of 2007. The timing and nature of repurchases are subject to market conditions and applicable securities laws.

Second-Quarter Operational Highlights

Wireless

AT&T operates the United States’ largest wireless digital voice and data network, and through roaming alliances around the world, AT&T provides the largest global presence among U.S. wireless carriers. In the second quarter, AT&T's wireless growth accelerated, led by solid subscriber gains and robust growth in data services.

Wireless service revenues grew 14.9 percent versus the year-earlier quarter to $9.5 billion. Total wireless revenues, which in addition to services include revenues from sales of handsets and accessories, were up 12.7 percent to $10.4 billion. This marked AT&T's fourth consecutive quarter of improved growth rates in wireless revenues.

Wireless data revenues increased 66.9 percent versus the year-earlier quarter to $1.7 billion – driven by strong increases in both consumer and business data usage including messaging, downloads, media bundles, laptop connectivity, smart phone connectivity and enterprise vertical market solutions. At the end of second quarter, AT&T's wireless operations had nearly 37 million active data users, up 39 percent over the past year. During the quarter, these customers sent 277 million multimedia messages and nearly 18 billion text messages, with both volumes more than double totals in the year-earlier second quarter.

Boosted by strong data growth, AT&T’s wireless service ARPU posted its best year-over-year growth in several years. Total service ARPU in the second quarter was $50.63, up 3.6 percent. Postpaid ARPU growth was even stronger, up approximately 6 percent.

AT&T posted a second-quarter net gain in wireless subscribers of 1.5 million to reach 63.7 million in service, up 6.4 million over the past year. Net adds were up more than 22 percent versus AT&T’s gain in the first quarter of this year and in line with results in the year-earlier second quarter. Postpaid net adds totaled 912,000, up more than 34 percent from results in the first quarter of this year.

Sales of the Apple iPhone have been robust. The June 29 launch allowed for less than two days of sales and activations before the end of the quarter. In that time, AT&T activated 146,000 iPhone subscribers, more than 40 percent of them new subscribers. Sales of the iPhone continue to be strong in July with store traffic above historical levels.

Strong network coverage and attractive handset selection contributed to further improvements in subscriber churn in the second quarter. Average monthly subscriber churn for AT&T's postpaid wireless customer base was 1.2 percent, down from 1.5 percent in the year-earlier quarter and 1.3 percent in the first quarter of 2007. Total churn, including prepaid and reseller results, was 1.6 percent, down from 1.7 percent in the year-earlier quarter and in the first quarter of 2007.

AT&T posted strong growth in wireless operating income in the second quarter, driven by revenue gains, strong execution of merger initiatives and continuing operational improvements. On a reported basis, second-quarter wireless operating expenses totaled $8.8 billion, up 7.1 percent versus the year-earlier quarter, and operating income was $1.6 billion, up 57.7 percent from $1.0 billion in the second quarter of 2006. Before merger-related costs, second-quarter wireless operating expenses totaled $7.8 billion, up 1.3 percent versus the year-earlier quarter, and operating income was $2.6 billion, up 70.6 percent from $1.5 billion in the second quarter of 2006.

AT&T's reported wireless operating income margin for the second quarter was 15.4 percent, up from 11.0 percent in the year-earlier quarter. Before merger-related costs, AT&T’s wireless operating income margin was 24.9 percent, up from 16.4 percent in the second quarter of 2006.

AT&T's unadjusted second-quarter wireless OIBDA service margin was 35.8 percent, up from 31.6 percent in the year-earlier quarter. Before merger-related costs, AT&T's wireless OIBDA service margin was 37.5 percent, up from 32.6 percent for the year-earlier quarter. From first-quarter 2007 levels, OIBDA service margins declined 170 basis points on an unadjusted basis and 140 basis points before

merger-related costs, reflecting increased customer acquisition costs, including handset discounts and a higher percentage of advanced handsets in the sales mix, and costs required to prepare for the June 29 launch of the Apple iPhone. For the full year 2008, AT&T expects to achieve an average adjusted wireless OIBDA service margin in the low 40 percent range. (OIBDA service margin is operating income before depreciation and amortization, divided by total service revenues.)

Wireline

AT&T's second-quarter wireline results included significant improvement in enterprise revenue trends, continued solid regional results and an accelerated ramp in U-verse video subscriber growth. Second-quarter wireline highlights are based on pro forma revenue and volume comparisons that combine results from AT&T and BellSouth in all periods and include ongoing shifts in customer categories to reflect AT&T's management of customer relationships.

AT&T’s enterprise revenue trends improved substantially in the second quarter, driven by strong double-digit growth in IP data revenues. Total enterprise revenues were $4.8 billion, up 2.0 percent sequentially and down 2.1 percent versus the year-earlier quarter. This represents an improvement from declines in the first quarter of this year of 4.1 percent sequentially and 4.0 percent versus the year-earlier quarter. Recurring service enterprise revenues, which exclude CPE revenues as well as results from acquired and divested assets, were up 1.9 percent sequentially and down 0.9 percent versus the second quarter of 2006. This follows a sequential decline of 1.6 percent and a year-over-year decline of 3.1 percent in the preceding quarter. Enterprise data revenues, which make up 49 percent of the category, grew 2.7 percent sequentially and 2.5 percent versus the year-earlier quarter.

Regional business revenues increased 4.5 percent versus the year-earlier second quarter with growth in both voice and data services. Regional business revenues from small and midsized firms increased more than 6 percent, consistent with year-over-year growth in the first quarter of this year. Regional business voice revenues posted low-single-digit percentage growth, with increased access lines, improved ARPU and low customer churn. Regional business data revenues, which make up 29 percent of the category, delivered high-single-digit growth, led by gains in broadband, managed Internet, Ethernet and VPN services.

Regional consumer revenues increased 0.4 percent, driven by a net gain of 946,000 regional consumer connections (retail access lines, high speed Internet plus video connections) over the past year. This growth in connections reflects gains in high speed Internet and video, which more than offset net declines in traditional access lines. Consumer primary lines declined by 193,000 in the second quarter versus a pro forma decline of 528,000 for the year-earlier quarter. These totals in part reflect national mass market migrations from wholesale; excluding these migrations, the change in total consumer switched access lines was generally consistent with year-earlier results, despite a nearly 30 percent increase in cable telephony coverage in AT&T’s footprint.

AT&T posted strong video growth in the second quarter. U-verse services are now available in parts of 23 metro areas, and sales and installations have ramped significantly. At the end of the second quarter, AT&T had 51,000 U-verse video subscribers, up from 13,000 three months earlier. Total video connections, which include AT&T U-verse service and bundled satellite television service, increased by 200,000 in the second quarter to 1.9 million. At the end of the second quarter, 5.9 percent of AT&T's primary consumer lines also had a video solution from AT&T, up from 3.8 percent a year earlier.

AT&T's high speed Internet connections, which include DSL, AT&T U-verse high speed Internet and satellite broadband services, increased by 400,000 in the quarter, reflecting typical seasonality due to end-of-school-year disconnects. At the end of the quarter, AT&T had 13.3 million consumer and business high speed Internet connections, up 2.2 million, or 20.0 percent, versus pro forma totals a year earlier. Across AT&T's regional operations, 35.0 percent of its consumer primary lines now have the company's broadband service, up from 27.8 percent one year earlier.

Additional Background on Adjusted and Pro Forma Results

AT&T’s reported results for the second quarter of 2006 do not include revenues and expenses from BellSouth Corporation, which AT&T acquired on Dec. 29, 2006, or from Cingular Wireless, whose results before the BellSouth transaction were accounted for as part of a joint venture. To give investors further basis for comparison, in addition to historical reported results, AT&T has provided supplementary pro forma results for 2005 and 2006, which combine revenues from AT&T, BellSouth and Cingular Wireless in all periods. These pro forma results are available at www.att.com/investor.relations.

AT&T's adjusted earnings for the second quarter of 2007 exclude: (1) pretax integration and amortization costs totaling $2.0 billion, or $0.21 per share, related to AT&T's 2006 acquisition of BellSouth Corporation, its 2005 acquisition of AT&T Corp., and Cingular Wireless' 2004 acquisition of AT&T Wireless; and (2) a reduction to operating income of $187 million, amounting to $0.02 per share, due to the merger-related purchase accounting treatment of deferred Advertising & Publishing revenues and associated expenses. Adjusted results for the second quarter of 2006 excluded pretax merger-related costs totaling $697 million, or $0.12 per diluted share.

AT&T's 2007 Advertising & Publishing results are affected by the BellSouth acquisition. Prior to its acquisition by AT&T, BellSouth amortized the revenues and expenses of printed directory advertising books over the life of the directories, typically 12 months. In accordance with purchase accounting rules, BellSouth's deferred revenues and expenses for all directories delivered prior to the close of the merger have been eliminated in consolidated results. In 2007, eliminating this amortization results in reductions to consolidated revenues, expenses and net income from the pre-acquisition BellSouth directory operations, but the adjustment does not affect cash from operations. These adjustments reduced second-quarter 2007 consolidated revenues by $306 million and consolidated operating expenses by $119 million.

AT&T continues to manage its print directory business using amortized results. As a result, amortized results are shown in the Advertising & Publishing segment on AT&T's Statement of Segment Income. In 2008, consolidated and segment results will both reflect amortization accounting.

AT&T's Advertising & Publishing revenues as shown in AT&T's Statement of Segment Income, totaled $1.5 billion in the second quarter, operating expenses were $1.1 billion and operating income was $423 million.

Also excluding merger-related intangible amortization and integration costs, second-quarter Advertising & Publishing operating expenses were $800 million and operating income was $678 million.

###

This AT&T news release and other announcements are available as part of an RSS feed at www.att.com/rss.

About AT&T

AT&T Inc. is a premier communications holding company. Its subsidiaries and affiliates, AT&T operating companies, are the providers of AT&T services in the United States and around the world. Among their

offerings are the world's most advanced IP-based business communications services and the nation's leading wireless, high speed Internet access and voice services. In domestic markets, AT&T is known for the directory publishing and advertising sales leadership of its Yellow Pages and YELLOWPAGES.COM organizations, and the AT&T brand is licensed to innovators in such fields as communications equipment. As part of its three-screen integration strategy, AT&T is expanding its TV entertainment offerings. Additional information about AT&T Inc. and the products and services provided by AT&T subsidiaries and affiliates is available at www.att.com.

© 2007 AT&T Knowledge Ventures. All rights reserved. AT&T is a registered trademark of AT&T Knowledge Ventures. Subsidiaries and affiliates of AT&T Inc. provide products and services under the AT&T brand. For more information, please review this announcement in the AT&T newsroom at www.att.com/newsroom.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results may differ materially. A discussion of factors that may affect future results is contained in AT&T's filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update or revise statements contained in this news release based on new information or otherwise. This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company's Web site at www.att.com/investor.relations.

Accompanying financial statements follow. Previously released pro forma comparisons are available on AT&T's Investor Relations Web site at www.att.com/investor.relations.

NOTE: OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA differs from Segment operating Income (loss), as calculated in accordance with GAAP, in that it excludes depreciation and amortization. OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with generally accepted accounting principles. Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies.

GRAPHIC 3 img1.jpg GRAPHIC begin 644 img1.jpg M_]C_X``02D9)1@`!`0$`8`!@``#__@`<4V]F='=AS````````````````````` M```````````````````````````````````````````````````````````` M`````````````````````````#__TNS````````````````````````````` M```````````````````````````````````````````````````````````` M```````^*J-15541$ZJI'S9>/BX*S.V7];?9OQ[ROZUO6K>,EKX][NQ8[:=T M?-7)WHGJWZD5B=7O@C9';I=HC4V[1CD:J^U#HIX>]Z\57+D\7CQ7X+\EQ2SD M).:+&SU(W>R=B^'"B_F8I_I`QK&_85995_Q*C4 M_,1X7-/^*)\;X>/\X62.]$YS62_8O2KZE-HY_+^D.L'LC2NVE11R.X M]N7MWZJOL+I6F[%\=*:172<&['.ZO1-M_?S(RX?+U$SS_"V'Q$9=S$3$=)GJ MW``8.E__T^S````````````````````````````````````````````````` M```````````````````5&AJR=-3V,=?5B5UF=%"]&[<+D7DBKZS7'BMDB9KT M8Y<],4UBW7DMP!"7LI:@U7C\=&YJ5[$;W/16\U5$7;G[BM*3>=0MDR12(F>\ M1[IL`%&@```````````,5J1T52:1GI,8YR;^*(57$2ZGS>.9>CRM:!CU5$;Y M.BKR78UIBXJS;<1$,,F:*6BFIF9[+>"K6LGG]/*R?)K!>I*Y&ODB;P/9OW[% MGCD;+&V1B\37HCFJG>BD7QS2(GUB4X\U;S-=:F.DO0`,VP"OZEM6*]_#-AF? M&V6VC7HUVW$G+DOB6`O:FJQ;NSKDBU[5[``*-````````'__U.S````````` M```````&KDK"U2[\BU M8W:(5O,UK,PH6'S.1PDSZZM[5K7KVC)NY>_92;^M]*9!V]W%R1RKU6%%5/\` M2J?@:%3*8K-0MBS,+XI6^:VU#][VH;\6E8+3=\7F*D[>YKN2I[=OX'K_`/'' M.\36>\?MX&\LQK',6KVG7XEN05M$.Y[\/JD5Z$E6GTA1^T@6DQ4^]P\2_/F0 M::%S#EYV:;4]2N7\C?IZ"X51;N05Z=[8H^'YJ97\G7/),_5MBCQ$3RPQ'TU_ M;>LZYPL'FQ2R6']R1L5$5?:IAI1Y/(9%,[D8DJQ5V*E:#?GLO5R^XE:N&P^' M;VS88HW-_MI5153WKT(_(9;ZYXL=B]Y(7)M9M)Z+&=Z-7O5>ASQP:F,4A8*Z(E>-$Z<";?`IVH-9V&:A^H].89,KE8&[R2/5&QUT7;DKOAOS0XWH M,VG_`*2,1G.NO_DXKFW=%7?I_%2P_27_`%MT M?^^_^\82L6G-:UM05+UI]"WCXJ+4=(ZTSAW39554]FQ"5_I:I2V(9)<+D(,7 M/-V4>0>U.!5]G_TM&J[^-QVF;TV6>YM1\3HWHSTG<2;;-]?,XWAO+;K\-IG4 MUJ7&83B6Q52:+A6=-U5J*[NZKS[M_8$.I:[U2S3V+[):-NRZ[%*QLE=NZ1+P M]57NZ_(I/T=:\;B\15P\^-R5R26RJ>4L;QL3B5$YJO@72KJBOJ?3V=DI5)HZ ME6*6&.=^W#,J,7=6^KI\30^AW^H47[Q)^*`7L``````````````````````` M```````````````````````````````````"D4<1'FG:AJOV:]+?%$_]1R<6 MREW*SI3^E<]^]_Q.G#::TO:/7E^7%XBE;Y,=;>D[_#:TQEY+U5].[NV_37LY MFKU=MT<:N4_K[A_\F3\'#4E2;&W8M1T&[OA\VU&G]I'X^[^'@8;-J&]K+!VJ M[^**6N]S5]SC:M8F9R5])B?I.F%[VBL8K^L6K]8W&I_:9S^67$8U9HV))/(Y M(X6+]YZ]#1CTY=L1I+?SE[RER;JD$G`QB^")L8-9=NMK#)`L:/\`*O-[3?AX MN6V^W<;?#JS^\Q'PD*5B:XZS68B97O:+YK5O$S$:]/=YPM^Y#E+&$R4J330M M22&?;996>OUH,?7/Y;^S_U>C:OOVZM"&#'ONR(JK^1*8FXF0Q-6WONLL:*OM M[_GN1BIY?K7GSCQU;_6__P#)@PMI,3CLO4D7;ZME>YB+^HJ<33KFD3BBL1SC M4^_^PX*Y)C--YGX9W'M_L^S/A+EG(9W*S.G[!>_F%C_`"G?@I"Z'5$TM7W5/2?_`+E)J]_,+'^4[\%*?I;3 M&,R>!AM662K*YSD56RN:G)53HAKCBLX;<4ZYQ_;#--X\37@C!FJ<;7V+*M9'$B[N5=T[C==93`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`M=)O(_,\HWX=MUWZ=Y%:6G)N^O3?\`$IOD MK&'6/?.8B?7<=_5O.TS:2-9(\_D?*MMT>Z3=F_[/@;.GG-/FAO@F)U M.T3&XTY$QM+).[*29N,OJNSVO;]D]>_]E39=IG+P,:M:HD[5Z20O1R?Q)36& MGHZ]QOM^FQ!B=1M5$8S(-7U/5J?B2D&`U7-MQ9*:NG_DL M*[Y)N?:]K64>S>!7^N1&+\R1B?JV9/M)Z=9/'A1R_(K?-?O5?'X?'VO^'R#1 M44B(_+W9;CDYJWB5&_CN9WV*TNV(P\;6Q(O!)+$FS(T[T1>]WX&I;KPQJWZX MR\]QZ^C78O`UR_L-YJ3.)J2(U+$L+8&[;0P(FW`WQ7UJ<>3),QNT[^T/0PXJ MUG5:Z[]9_P"O=)M:C6HUJ;(B;(AS>YC]4:1UED\QAL0W,4\JJ.>QK^%\;O#X M[_$Z2#E=KD65P6NM1YW%9S)8V.*.O99P4XI6[PQHY'*Y=UZKM[>1:OI%TOD< M]5HW\.YOUAC)NUB8Y=N-.2[(J\M]VHI/@FYU8`4K1. M*S6-Q-O3&9H,;4B:]D%R%S>&9CM]]TWWWY[[JA#Z3K:NT1>3`/PWUCBI;.[+ MD3]NS:Y417+[N>RG30````````````````````````````````````````!_ M_];LP``````````````````%?TW3LU7 M8%\>:V.)B.K/-X>N6:S/K$[1>H,2N8QJPQO2.>-Z20O7[KTZ&A#J2]6C2'(X M.]Y0WDKJ\?&QZ^*+N6,$5R1%>&T;A-\,S;CI;4HO%7,G=FEEMT$IUMD[)KW; MR*O>JIW'G4]"3(8*>*!JNG9M)$B=>)J[\OF2P(C)J\6K&M)G%Q8YI:=[0FF: MUIL%J[>A=#:N3*]S'=6HB;(A%:FQ>1ERKTHUWOAR,3(IWM3DSAF=O"UMBC',_7\^[Q'&V&%L<:>:QJ-:GJ1.1`MU%D:BK'DL#:1R+R?53 MM&*6$&=;1&^*-M;TM.N&VE:J178I-"<<3DC)VB8]__`!":LQLF2PCVUV*ZQ"Y)8D;U54\/=N9YJBYS M3OD]R-T,D\2<2.3FQ_\`VA*`M&68K$1TG:)PUF]K3UC4PK-/,Y/$UVT\IB;4 M[XDX6V*K.T;(B=%]2F]CLEE,A=1SL8ZG11J[NL+M(Y>[9O<3`)MDK.YX>2_'F2H(\V>&(USCJGR(X[6F>5O6%8IY?)X>NVEE,5:L+"G"RQ5;QMD1 M.F_@IOX_)93(7FN7&.J44:O$ZPNTCE[MF]Q,`FV2L[GAYRK3#>NHXYU'R_*O M9ZG>AR]/-T(%LNKM6.6%OI.8OA\5,OU_M,[*-GM7O\`<3@' MFQ,1%HWI/DS%IFMM;]5?TG2O8]E^"[#PN6RKVR)Z,FZ=4]074&2IROCR&"LJ MB.7ADJ_:-5.[V%@`G+%K3:U=[17!-*16EIC7R5B-EW/Y^G>DHRTJ='B?QEN:Q5RF-X5NTU79CEV25B]6_\\2ROIJB?AX'8#))8_42+S=_P!KP)+%39&>LZ3)5XZ\CG*K(V.XE:WN MW7Q-X%;7K,:BNEZ8[Q.[6W[``,FP`````````````^*B.145$5%Y*B]Y6\EH M?&6YO**[/)I>N\:JW\"R@M6UJSN)5M2MXU:-J>W365K$R._$SQZ? MR4O*>]:5O^*?;_:A:06\RRD8:1T1>.P%+'N[1L;72KU>J?\`%^)*`%)F9YRT MB(B-0``A(``````````````````/_]?LP``````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````__]#LP``````````````````````````````````` M```````````````````````````````````````````````````````````` ?```````````__]'LP````````````````````#__V3\_ ` end EX-99 4 ex99_2.htm SELECTED FINANCIAL STATEMENTS & OPERATING DATA

Financial Data

AT&T Inc.
Consolidated Statements of Income
Dollars in millions except per share amounts
Unaudited	Three Months Ended					Six Months Ended
		6/30/2007		6/30/2006	% Chg		6/30/2007		6/30/2006	% Chg
Operating Revenues
Voice	$	10,378	$	8,509	22.0%	$	20,833	$	17,124	21.7%
Data		5,746		4,534	26.7%		11,401		9,035	26.2%
Wireless service		9,513		8	-		18,583		16	-
Directory		1,155		909	27.1%		2,177		1,810	20.3%
Other		2,686		1,810	48.4%		5,453		3,541	54.0%
Total Operating Revenues		29,478		15,770	86.9%		58,447		31,526	85.4%

Operating Expenses
Cost of sales (exclusive of depreciation
and amortization shown separately below)		11,478		7,163	60.2%		22,730		14,527	56.5%
Selling, general and administrative		7,640		3,517	-		15,077		7,226	-
Depreciation and amortization		5,416		2,486	-		11,032		4,978	-
Total Operating Expenses		24,534		13,166	86.3%		48,839		26,731	82.7%
Operating Income		4,944		2,604	89.9%		9,608		4,795	-
Interest Expense		879		472	86.2%		1,752		936	87.2%
Interest Income		39		95	-58.9%		74		180	-58.9%
Equity in Net Income of Affiliates		210		455	-53.8%		383		789	-51.5%
Other Income (Expense) - Net		88		15	-		557		26	-
Income Before Income Taxes		4,402		2,697	63.2%		8,870		4,854	82.7%
Income Taxes		1,498		889	68.5%		3,118		1,601	94.8%
Net Income	$	2,904	$	1,808	60.6%	$	5,752	$	3,253	76.8%


Basic Earnings Per Share:
Net Income	$	0.47	$	0.47	-	$	0.93	$	0.84	10.7%
Weighted Average Common
Shares Outstanding (000,000)		6,145		3,886	58.1%		6,184		3,884	59.2%

Diluted Earnings Per Share:
Net Income	$	0.47	$	0.46	2.2%	$	0.92	$	0.83	10.8%
Weighted Average Common
Shares Outstanding with Dilution (000,000)		6,195		3,905	58.6%		6,230		3,903	59.6%

Financial Data

AT&T Inc.
Statements of Segment Income
Dollars in millions
Unaudited
	Three Months Ended			Six Months Ended

Wireline	6/30/2007	6/30/2006	% Chg	6/30/2007	6/30/2006	% Chg
Segment Operating Revenues
Voice	$ 10,586	$ 8,509	24.4%	$ 21,263	$ 17,124	24.2%
Data	5,980	4,534	31.9%	11,842	9,035	31.1%
Other	1,427	1,393	2.4%	2,874	2,698	6.5%
Total Segment Operating Revenues	17,993	14,436	24.6%	35,979	28,857	24.7%

Segment Operating Expenses
Cost of sales	7,623	6,681	14.1%	15,181	13,577	11.8%
Selling, general and administrative	3,959	3,303	19.9%	8,052	6,748	19.3%
Depreciation and amortization	3,300	2,438	35.4%	6,740	4,879	38.1%
Total Segment Operating Expenses	14,882	12,422	19.8%	29,973	25,204	18.9%
Segment Income	$ 3,111	$ 2,014	54.5%	$ 6,006	$ 3,653	64.4%

Wireless *
Segment Operating Revenues
Service revenues	$ 9,540	$ 8,302	14.9%	$ 18,632	$ 16,315	14.2%
Equipment sales	855	923	-7.4%	1,760	1,898	-7.3%
Total Segment Operating Revenues	10,395	9,225	12.7%	20,392	18,213	12.0%

Segment Operating Expenses
Cost of services and equipment sales	3,941	3,846	2.5%	7,611	7,493	1.6%
Selling, general and administrative	3,040	2,757	10.3%	5,953	5,603	6.2%
Depreciation and amortization	1,810	1,605	12.8%	3,701	3,292	12.4%
Total Segment Operating Expenses	8,791	8,208	7.1%	17,265	16,388	5.4%
Segment Operating Income	1,604	1,017	57.7%	3,127	1,825	71.3%
Equity in Net Income (Loss) of Affiliates **	(50)	(28)	-78.6%	(91)	(63)	-44.4%
Segment Income	$ 1,554	$ 989	57.1%	$ 3,036	$ 1,762	72.3%

* Results include 100% of AT&T Mobility's actual results
** Includes minority interest recorded as Other Income (Expense) - Net on the Consolidated Statements of Income

Advertising & Publishing
Segment Operating Revenues	$ 1,478	$ 918	61.0%	$ 2,921	$ 1,833	59.4%

Segment Operating Expenses
Cost of sales	386	288	34.0%	841	576	46.0%
Selling, general and administrative	406	140	-	685	291	-
Depreciation and amortization	263	-	-	505	1	-
Total Segment Operating Expenses	1,055	428	-	2,031	868	-
Segment Operating Income	423	490	-13.7%	890	965	-7.8%
Equity in Net Income (Loss) of Affiliates	-	(6)	-	-	(11)	-
Segment Income	$ 423	$ 484	-12.6%	$ 890	$ 954	-6.7%

Other ***
Segment Operating Revenues	$ 558	$ 455	22.6%	$ 1,102	$ 921	19.7%
Segment Operating Expenses	564	356	58.4%	1,028	746	37.8%
Segment Operating Income (Loss)	(6)	99	-	74	175	-57.7%
Equity in Net Income of Affiliates	202	446	-54.7%	374	777	-51.9%
Segment Income	$ 196	$ 545	-64.0%	$ 448	$ 952	-52.9%

*** Equity in Net Income of Affiliates includes our 60% proportionate share of AT&T Mobility's results in 2006


Financial Data

AT&T Inc.
Consolidated Balance Sheets
Dollars in millions except per share amounts
	6/30/07	12/31/06
	Unaudited

Assets
Current Assets
Cash and cash equivalents	$ 2,570	$ 2,418
Accounts receivable - net of allowances for
uncollectibles of $1,371 and $1,276	15,368	16,194
Prepaid expenses	1,743	1,477
Deferred income taxes	2,360	3,034
Other current assets	2,352	2,430
Total current assets	24,393	25,553
Property, Plant and Equipment - Net	94,055	94,596
Goodwill	67,072	67,657
Licenses	35,370	34,252
Customer Lists and Relationships - Net	16,683	18,922
Other Intangible Assets - Net	6,064	6,566
Investments in Equity Affiliates	2,342	1,995
Postemployment Benefit	14,519	14,228
Other Assets	6,848	6,865
Total Assets	$ 267,346	$ 270,634

Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year	$ 7,701	$ 9,733
Accounts payable and accrued liabilities	22,738	25,508
Accrued taxes	5,932	3,026
Dividends payable	2,168	2,215
Total current liabilities	38,539	40,482
Long-Term Debt	53,970	50,063
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes	20,475	27,406
Postemployment benefit obligation	28,609	28,901
Unamortized investment tax credits	166	181
Other noncurrent liabilities	13,926	8,061
Total deferred credits and other noncurrent liabilities	63,176	64,549

Stockholders' Equity
Common shares issued ($1 par value)	6,495	6,495
Capital in excess of par value	91,277	91,352
Retained earnings	31,706	30,375
Treasury shares (at cost)	(12,751)	(7,368)
Accumulated other comprehensive income	(5,066)	(5,314)
Total stockholders' equity	111,661	115,540
Total Liabilities and Stockholders' Equity	$ 267,346	$ 270,634


Financial Data

AT&T Inc.
Consolidated Statements of Cash Flows
Dollars in millions, increase (decrease) in cash and cash equivalents
Unaudited		Six Months Ended
	6/30/07			6/30/06
Operating Activities
Net income	$	5,752	$	3,253
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization		11,032		4,978
Undistributed earnings from investments in equity affiliates		(344)		(752)
Provision for uncollectible accounts		738		320
Amortization of investment tax credits		(15)		(14)
Deferred income tax (benefit) expense		(546)		65
Net gain on sales of investments		(64)		(10)
Gain on license exchange		(409)		-
Changes in operating assets and liabilities:
Accounts receivable		87		545
Other current assets		(665)		(84)
Accounts payable and accrued liabilities		(287)		(1,376)
Stock-based compensation tax benefit		(107)		(5)
Other - net		(171)		233
Total adjustments		9,249		3,900
Net Cash Provided by Operating Activities		15,001		7,153

Investing Activities
Construction and capital expenditures		(7,460)		(4,042)
Net investments in affiliates		-		(717)
Dispositions		520		55
Acquisitions, net of cash acquired		(221)		(115)
Proceeds from sale of marketable securities		471		-
Proceeds from sale of debt and equity securities		227		-
Investments in debt and equity securities		(189)		-
Other		17		7
Net Cash Used in Investing Activities		(6,635)		(4,812)

Financing Activities
Net change in short-term borrowings with
original maturities of three months or less		(1,993)		1,020
Issuance of long-term debt		5,924		1,491
Repayment of long-term debt		(2,065)		(2,540)
Purchase of treasury shares		(6,904)		(148)
Issuance of treasury shares		1,252		236
Dividends paid		(4,414)		(2,581)
Stock-based compensation tax benefit		107		5
Other		(121)		49
Net Cash Used in Financing Activities		(8,214)		(2,468)

Net increase (decrease) in cash and cash equivalents		152		(127)
Cash and cash equivalents beginning of year		2,418		1,224
Cash and Cash Equivalents End of Period	$	2,570	$	1,097

Financial Data

AT&T Inc.
Supplementary Operating Data
Dollars in millions
Unaudited			Three Months Ended		Six Months Ended
			6/30/2007	6/30/2006	6/30/2007	6/30/2006

In-Region ¹
	Total Consumer Revenue Connections (000)
		Retail Consumer Access Lines			36,398	25,990
		Broadband Connections:
		Consumer DSL Lines			11,202	6,570
		U-verse High-Speed Internet Access			50	1
		Satellite Broadband			8	-
		Video Connections: ²
		DISH/ DirecTV Connections			1,846	590
		U-verse Video Connections			51	-
	Total Consumer Revenue Connections (000)				49,555	33,151

	Switched Access Lines (000)
		Retail Consumer - Primary			32,159	22,310
		Retail Consumer - Additional			4,239	3,680
		Retail Business ⁵			23,043	16,727
		Retail ⁵			59,441	42,717

		Wholesale ^{3, 5}			4,342	4,913
		Coin ⁴			295	281
	Total Switched Access Lines (000)				64,078	47,911

	Unbundled Loops (000)				2,081	1,640
	DSL Lines in Service (000)				13,203	7,774
		Net DSL Line Additions (000)	361	342	1,042	853
	Video Connections (000) ²				1,897	590
		Net Video Connection Additions (000) ²	200	41	387	77

Wireless
	Wireless Voice Customers (000)				63,673	57,308
	Net Customer Additions (000)		1,456	1,498	2,647	3,177
	M&A Activity, Partitioned Customers and Other Adjs.		-	-	64	(13)
	POPs (000,000)				299	296


¹	In-region represents access lines served by AT&T's incumbent local exchange companies.
²	Video Connections include sales under agency agreement with EchoStar and DirecTV customers and U-verse connections.
³	Wholesale lines include 0.6 million lines purchased by AT&T Corp. at 6/30/07.
⁴	Coin includes both retail and wholesale access lines.
⁵	Prior year amounts restated to conform to current period reporting methodology.

Financial Data

AT&T Inc.

Non-GAAP Wireless Reconciliations
Wireless Segment Adjusted¹OIBDA
Dollars in Millions
unaudited

Quarter Ended June 30, 2007		Adjusting Items
	GAAP		Integration Costs	Intangible Amortization	Adjusted
Service Revenue	$ 9,540				$ 9,540
Equipment Revenue	855				855
Total Operating Revenues	$ 10,395		$ -	$ -	$ 10,395

Operating Expenses
Cost of Services and Equipment Sales	3,941		(48)	-	3,921
Selling, General and Administrative	3,040		(115)	-	2,897
Depreciation and Amortization	1,810		(83)	(737)	990
Total Operating Expenses	8,791		(246)	(737)	7,808

Operating Income	1,604				2,587

Plus: Depreciation and Amortization	1,810				990
OIBDA	3,414				3,577
OIBDA as a % of Service Revenue	35.8%				37.5%

Quarter Ended June 30, 2006		Adjusting Items
	GAAP		Integration Costs	Intangible Amortization	Adjusted
Service Revenue	$ 8,302				$ 8,302
Equipment Revenue	923				923
Total Operating Revenues	$ 9,225		$ -	$ -	$ 9,225

Operating Expenses
Cost of Services and Equipment Sales	3,846		(67)	-	3,779
Selling, General and Administrative	2,757		(19)	-	2,738
Depreciation and Amortization	1,605		(77)	(336)	1,192
Total Operating Expenses	8,208		(163)	(336)	7,709

Operating Income	1,017				1,516

Plus: Depreciation and Amortization	1,605				1,192
OIBDA	2,622				2,708
OIBDA as a % of Service Revenue	31.6%				32.6%

¹ OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA differs from segment operating income (loss), as calculated in accordance with GAAP, in that it excludes depreciation and amortization. OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment, or other discretionary uses. OIBDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP. Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies.

EX-99 5 ex99_3.htm DISCUSSION OF OIBDA

EXHIBIT 99.3

OIBDA DISCUSSION

OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA margin is calculated as OIBDA divided by service revenues. OIBDA differs from Segment Operating Income (Loss), as calculated in accordance with GAAP, in that it excludes depreciation and amortization. OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with generally accepted accounting principles. Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies.

We believe these measures are relevant and useful information to our investors as they are part of AT&T Mobility’s internal management reporting and planning processes and are important metrics that AT&T Mobility’s management uses to evaluate the operating performance of its regional operations. These measures are used by management as a gauge of AT&T Mobility’s success in acquiring, retaining and servicing subscribers because we believe these measures reflect AT&T Mobility’s ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective manner. Management also uses these measures as a method of comparing AT&T Mobility’s performance with that of many of its competitors. The financial and operating metrics which affect OIBDA include the key revenue and expense drivers for which AT&T Mobility’s operating managers are responsible and upon which we evaluate their performance.

OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA excludes other, net, minority interest in earnings of consolidated entities and equity in net income (loss) of affiliates, as these do not reflect the operating results of AT&T Mobility’s subscriber base and its national footprint that AT&T Mobility utilizes to obtain and service its customers. Equity in net income (loss) of affiliates represents AT&T Mobility’s proportionate share of the net income (loss) of affiliates in which it exercises significant influence, but does not control. As AT&T Mobility does not control these entities, our management excludes these results when evaluating the performance of our primary operations. OIBDA excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with its capitalization and tax structures. Finally, OIBDA excludes depreciation and amortization, in order to eliminate the impact of capital investments.

We believe OIBDA as a percentage of service revenues to be a more relevant measure of AT&T Mobility’s operating margin than OIBDA as a percentage of total revenue. AT&T Mobility generally subsidizes a portion of its handset sales, all of which are recognized in the period in which AT&T Mobility sells the handset. This results in a disproportionate impact on its margin in that period. Management views this equipment subsidy as a cost to acquire or retain a subscriber, which is recovered through the ongoing service revenue that is generated by the subscriber. AT&T Mobility also uses service revenues to calculate margin to facilitate comparison, both internally and externally with its competitors, as they calculate their margins using services revenue as well.

There are material limitations to using these non-GAAP financial measures. OIBDA and OIBDA margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. Furthermore, these performance measures do not take into account certain significant items, including depreciation and amortization, interest expense, tax expense and equity in net income (loss) of affiliates, which directly affect AT&T Mobility’s net income. Management compensates for these limitations by carefully analyzing how its competitors present performance measures that are similar in nature to OIBDA as we present it, and considering the economic effect of the excluded expense items independently as well as in connection with its analysis of net income as calculated in accordance with GAAP. OIBDA and OIBDA margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP.